CC minimum payment increase...HOLY COW!

[KathyTX]

Let's keep our responses to each other respectful, please.

 

[dvcgirl]

AMEN. I am privileged fortunate and blessed to be able to take care of my family's needs without borrowing, but I fully recognize that many people are one paycheck away - or less - from a disaster. What's sinful is that here in our rich country, we can't be bothered to create a real and meaningful safety net for our own neighbors and friends, so you have to use a 20% credit card to pay for heat and the dentist. We should be ashamed.

Let's not forget for one minute please that the number one or two cause of bankruptcy is medical bills. The new law hurts the people without health insurance the most - and will do NOTHING to change the behavior of the credit card skofflaws.

Over 50% of the residents of this country are one paycheck away from disaster. And yes, medical bills are one of the leading causes of bankruptcy. So is unemployment. However, those aren't the only two reasons. We now live in a society that is consumed by the trappings of wealth. We idolize the wealthy in all of their forms....from Bill Gates to Donald Trump, Micheal Jordan to Martha Stewart. And when we look around us, even in our own towns and neighborhoods we see McMansions and luxury cars. Our neighbors take a minimum of one really nice vacation a year. On the surface it appears that everything is fine...and so we all think that we should have all of that too. Except, we don't have access to their financial records. Those records may show a pile of debt, houses mortgaged to the hilt, and will probably show that the 60K SUV is leased, not owned. It's like a house of cards waiting to collapse.

And so, no it's not likely that any of us will ever be as wealthy as Martha Stewart, but we can surely put that $280 scarf from the Burberry on our credit card. Maybe that will make us "feel" wealthy....at least until the credit card bill arrives. Nobody at the Burberry is going to tell you that you really can't afford it. They'll be more than happy to take your Credit card. I bring up the Burberry because my DH and I were in the Mall at Millennia here in Orlando recently and watched as people spent in a frenzy to buy just those types of scarves...for over $200 a pop. We scratched our heads and wondered..."Just how much does a person have to make to justify spending $250 on a scarf?". In my book....a lot. If you go by the Census, the top 5% of earners in this country make a combined household income of over $150,000. My DH and I are in that top bracket, and I have to tell you that there's no way on this planet I would ever in a million years spend $250 on a scarf. And it made us wonder just how many people in that store could really afford what they were buying.

Yes, I agree with you on health care costs. Health care costs are positively out of control. No doubt about it. Health care costs and Social Security are the wild cards facing many of us down the road as we reach retirement. But make no mistake about it, there are a *huge* amount of people who are living above their means in our society today. Huge. You have to go no further than the boards on this very website to see that. There are a whole lot of people who admit to being in serious consumer debt and yet here they are on a board dedicated in large part to traveling to Walt Disney World. Many of these same people have signatures with a slew of recent (and sometimes upcoming) Disney trips listed in them. That's not judging them or saying that they are terrible people...but there is no other way to look at it but to say that they are living beyond their means.

And so, sometimes you have people living paycheck to paycheck, living above their means with some CC debt with no emergency fund in place and then bam....perhaps they lose their job. They have a tough time finding a job and no emergency fund and so they skip the COBRA payment and their medical insurance is terminated. And then they are hit with an unexpected medical bill....which ends up on a CC, and it all ends up in bankruptcy. And it ends up in a statistic in some book saying that this particular bankruptcy was due to medical debt. In fact, there's much more to the story. Had this same person saved up for an emergency fund instead of overspending to begin with then they could have made that COBRA payment and they would have been covered insurance-wise....no bankruptcy.

I've heard the calls on many financial shows about people filing for bankruptcy and lots say that it's due to unpaid medical bills. If the host digs a little deeper, it ususal comes out that there's more than just medical bills on those credit cards.

If I know one thing, I know that as a society we are out of control with respect to our spending. Our government spending is out of control and our personal spending is out of control. We have a national savings rate of zero. We are saving less now than we did at the time of the Great Depression. Pension funds are folding left and right and yet the average person is saving far less than they will need for retirement.

Personally, I hope threads like this do some good and inspire people to get started in creating a more secure financial foundation. We all have to do this for ourselves...the government is not going to be able to keep the promises it is making to us. Social Security and Medicare are in big, big trouble. Anyone who thinks that these programs will exsist as they do now 20 years (even 10 years) from now needs to think again. Look at what the British have had to do....like us, they have a huge Social Security issue (way underfunded). And they have made deep cuts to that program. The English are getting far less money and can't collect until they are much older. That is what is coming our way. Better to know this now, and begin to prepare for it....time for everyone to step up and take responsibility for your financial future.

 

[alliecats]

I'd be interested in seeing your supporting data for this statement. Until I see it from a reputable source, I will not believe it. Anyone I've known personally or heard about that has filed bankrupcy, has done so because they were in the habit of living beyond their means.

I looked it up because I was interested, too. This is what I found, maybe this is the study McNuss was referring to:
Study

 

[Caradana]

There but for the grace of God go I, that the dominos fell in my favor and I got the education that led to the job that led to security. I'm not going to begrudge the person who has to carry a credit card balance to get by, though I don't think I'd be able to have a baby in good conscience if I was living in the red. That's just me.

 

[eclectics]

I looked it up because I was interested, too. This is what I found, maybe this is the study McNuss was referring to:
Study

Very interesting article. I'd have believed it even without the study. When a couple of days in the hospital runs into the thousands of dollars, even without tests, it's small wonder the underinsured have very few options. A sudden illness can destroy your savings in a remarkably short time.

 

[richiebaseball]

There but for the grace of God go I, that the dominos fell in my favor and I got the education that led to the job that led to security.

I'm rather surprised you got where you are without hard work and some sacrifice. Good thing you were born lucky I guess.

 

[OhMari]

Nice. I may finally try out my ignore feature.

 

[denisem]

AMEN. I am privileged fortunate and blessed to be able to take care of my family's needs without borrowing, but I fully recognize that many people are one paycheck away - or less - from a disaster.

ETA: Dvcgirl said it much better.

But I think it also serves us to determine WHY some are one paycheck away from a disaster. I.E., I have family members with kids that just haven't learned NEED vs. WANT. Can't pay their electric or phone bill...but they have all the premium channels on cable, buy the latest DVD's and each kid got an Ipod for Christmas.

Unfortunately, working as support in the automotive credit collection biz also opened my eyes. For every person that truly ran into unforeseen financial difficulties and actively worked toward a solution (yes, collectors will work with you), there were two others experienced in "working the system".

 

[dvcgirl]

ETA: Dvcgirl said it much better.

But I think it also serves us to determine WHY some are one paycheck away from a disaster. I.E., I have family members with kids that just haven't learned NEED vs. WANT. Can't pay their electric or phone bill...but they have all the premium channels on cable, buy the latest DVD's and each kid got an Ipod for Christmas.

Unfortunately, working as support in the automotive credit collection biz also opened my eyes. For every person that truly ran into unforeseen financial difficulties and actively worked toward a solution (yes, collectors will work with you), there were two others experienced in "working the system".

Well, WHY is the question I suppose. For many it's simply not enough income for the lifestyle they're living. Priorities out of whack. Saving for luxuries before retirement. Fear...that's a big one. Fear that they'll never have enough to retire anyway so why worry (when this usually isn't the case). The earlier you start, the less you actually have to save.

 

[cardaway]

You used words in people's post to twist people's statements,

Where in this thread??? I was the one with the posts being twisted this time.

 

[cardaway]

Nice. I may finally try out my ignore feature.

Don't say, do.

 

[katerkat]

I just got my Dec. credit card bill from a department store and was shocked. My normal monthly balance ranges between $50-100 of which I pay off every month. Usually the minimum payment is $20, the Dec. bill, higher only because of Christmas, is $236 and the minimum payment...$9.00!!! Yes NINE DOLLARS. I can't imagine only paying $9 a month!

My minimum on the CC we paid for our TV with is $29. (It actually dropped from about $80 a month!) I just calculated that and it'd be about 8.3 years to pay that off at that rate -- and that's without any interest!

(And for the record, we could pay it off today, but it's a 0% interest purchase and the money's better off in savings. It'll be paid in full before the interest kicks in!)

 

[cardaway]

But I think it also serves us to determine WHY some are one paycheck away from a disaster. I.E., I have family members with kids that just haven't learned NEED vs. WANT. Can't pay their electric or phone bill...but they have all the premium channels on cable, buy the latest DVD's and each kid got an Ipod for Christmas.

All you have to do is read the posts here. I've lost count how many times I've seen people going on about their trip to Disney not long after having posted about financial problems in other threads.

Need vs. want is a problem with the adults, not just the kids.

 

[Zurealsoon]

. I've lost count how many times I've seen people going on about their trip to Disney not long after having posted about financial problems in other threads.

.

I've read that also.

 

[Aidensmom]

There is a lot of misinformation being spread about this, mostly by credit counseling agencies and companies trying to give you a loan. It is not a new law, has nothing to do with the new bankruptcy law, it is a guideline, and it is not mandatory. Each credit card company can decide for themselves what they want to do.

In a nutshell, the average credit card charged 2 - 2.5% of the balance as a minimum payment. The new guideline is to charge all finance charges and fees plus 1% of the balance as a minimum payment. For some people, that change will only be a couple of dollars, literally.

Here is a good link which really explains it:

http://www.militarymoney.com/columns/1/346


I myself have a fairly high balance on my card because we had some very unexpected expenses, including a tree coming through our roof, having to replace the entire a/c system, and a water heater blowing up (destroying kitchen cabinets and flooding a bedroom in the process), and some medical bills. I have been paying over twice the minimum payment every month anyways, because I have no intention of paying on that card for 20 years or more.

 

[Caradana]

I'm rather surprised you got where you are without hard work and some sacrifice. Good thing you were born lucky I guess.

Birthright has more to do with it than anything. If you were lucky enough to be born to reasonably financially astute people, you have a lower likelihood of making the financial mistakes so scorned on this thread. Are there exceptions? Sure. But there are also people who work their backsides off for $5.15 an hour, who were always average in school, who had parents who never encouraged or expected much, and who repeatedly tripped into life's potholes for lack of internal motivation and decent guidance. Are they "more stupid" than the family that pinched pennies? Yea, maybe. But I just can't see myself taking any pleasure from verbally knifing them. My rewards for financial responsibility come every day, when I can throw anything the heck I want in my Wal-Mart cart and not think twice about the total, and when I can submit a resume with the Golden Ticket of College References on the top line and virtually guarantee myself an interview. That's all I need.

 

[Nancy]

What I don't understand, and I could be wrong, but I went YEARS without health insurance, so I am very familiar with medical bills....I always thought that medical bills can not go against your credit, unless it it actually goes to collection. As long as you were sending SOMETHING, even $10 a month, they could not send your account to collections.

I will never put a medical bill on my credit card. If I get a large co-payment, or deductible, I just send X amount a month until it is paid off.

They can send your bill to collections no matter how much you send them if they want their money. If you owe 500.00 and send them 10.00 a month you can bet they will send you to collections to get their money faster. Even not paying your full balance on your utilities and setting up a payment schedule goes on your credit history.

 

[Planogirl]

I've been in that bleak state where using a credit card is necessary to get by and let me tell you, it's no picnic. Layoffs have been murderous for us along with past medical issues so it's been hard to get those credit card balances down. But I can also state that without the credit cards, I don't really know what we would have done a few times.

 

[dvcgirl]

Birthright has more to do with it than anything. If you were lucky enough to be born to reasonably financially astute people, you have a lower likelihood of making the financial mistakes so scorned on this thread. Are there exceptions? Sure. But there are also people who work their backsides off for $5.15 an hour, who were always average in school, who had parents who never encouraged or expected much, and who repeatedly tripped into life's potholes for lack of internal motivation and decent guidance. Are they "more stupid" than the family that pinched pennies? Yea, maybe. But I just can't see myself taking any pleasure from verbally knifing them. My rewards for financial responsibility come every day, when I can throw anything the heck I want in my Wal-Mart cart and not think twice about the total, and when I can submit a resume with the Golden Ticket of College References on the top line and virtually guarantee myself an interview. That's all I need.

Well, I don't know about the birthright thing. I think so much of personal finance is well....personal and comes down to individual personalities. There are so many examples in my own family where the birthright thing doesn't play out that I'd have to think that there's not much truth to it. My parents were both good with money and frugal...gave their three daughters great financial role models. But my own Mom's siblings, well four of them struggle. Our of those four, three are still renters with no emergency fund and nothing in retirement accounts. All are in their late 40s.

My own husband's brother is 11 years older than my DH and he's never been good with money. Coincidentally, he never went to college and he's not particularly the type of person I'd call a "go-getter". He bought his first house in his forties when his 70 year old parents gifted him the down payment. Of course, they offered to pay for his college education in full back when he was 17, and he chose to bum around and do nothing until he was in his mid-twenties (which is when he got married and started having children that he couldn't afford to raise). That choice has dogged him his entire life. I hear from his family the kinds of things I read here. "Right after we take this trip...that's it! We're gonna buckle down and start saving..." And then they'll come back from that vacation and buy a new car. That cycle will never end.

Getting out of debt and staying out of debt takes a huge lifestyle change and you can't gorge yourself at the "excessive spending buffet" and then think that you can go cold turkey.

Like you Cardana, we have been fortunate, but our good fortune comes with a whole heck of a lot of hard work. To never worry about money is an amazing place to be and I am always trying to help those in my extended family get to that place. But like any big lifestyle change, they have to want to make that change. I get a lot of talk and lip service from some of them about "this year being different". There's a lot of talk from them now about this. No coincidence there....it's the beginning of the year, lots and lots of resolutions. Look around these boards here...same thing. The budget chatter and "paying down debt" threads have picked up considerably around here this week. My only advice to those here looking to change...it takes discipline, time and a whole lot of hard work....but the payoff is sooooo worth it.

 

[cardaway]

I understand that people have really bad things happen and do not have the money necessary to cover expeneses.

But with that said, is anybody really better off in the long run because credit cards were an option? Everything I've read about the typical situations basically comes down to credit cards making it worse, prolonging the problem long after the crisis is over.